YieldIQ Strategy
The Yield IQ Strategy is ICHI’s core method for optimizing liquidity management through Inventory-Based Rebalancing, a dynamic approach that prioritizes capital efficiency and asset accumulation.
Last updated
The Yield IQ Strategy is ICHI’s core method for optimizing liquidity management through Inventory-Based Rebalancing, a dynamic approach that prioritizes capital efficiency and asset accumulation.
Last updated
How It Works: Dynamic Rebalancing to Maximize Yield
At the heart of the Yield IQ Strategy is Inventory-Based Rebalancing, which continuously monitors the asset mix in the liquidity pool and dynamically adjusts positions based on five distinct states:
Healthy State: The optimal state for earning trading fees and accumulating the deposit token. Liquidity is positioned within the ideal range to maximize fee generation.
Over Inventory State: If the pool holds too much of the deposit token, the strategy prioritizes selling excess tokens to return to a healthy balance.
Under Inventory State: If the pool holds too little of the deposit token, the strategy prioritizes buying more of the token to restore balance.
High Volatility State: During periods of rapid price swings, the strategy spreads liquidity across a wider range to mitigate risk.
Extreme Volatility State: In extreme market conditions, the strategy locks the vault to prevent further deposits and requires human intervention to manage risk.
Healthy State: Ensures liquidity is positioned to maximize trading fee accumulation. (See diagram below)
Over Inventory State: Adjusts to prioritize selling deposit tokens and return to a healthy state. (See diagram below)
Under Inventory State: Focuses on buying deposit tokens to restore balance. (See diagram below)
